VSH, ARW Among Stifel Favorites Pending Sharp Inventory Reduction

By Tiernan Ray

Expect lower-than-normal semiconductor sales this quarter, but a faster-than-normal burn-off of inventories, writes Matthew Sheerin of Stifel Nicolaus this morning, reflecting on what were already slower-than-expected sales of electronics last quarter.

The result of all that will be slow sales this quarter and a sharp clearing of inventory, before a recovery in chip sales comes in the first half of next year, once inventories are replenished:

We typically see a 14% increase in sales and a 1% reduction in inventory dollars in Q4, for a 10% decline in inventory days. Based on below seasonal guidance from virtually every segment of the supply chain with the exception of mobility, we expect sales trends to be below normal, but we also expect to see inventories decline steeper than normal.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.